URGENT CALL TO ACTION!

"Pay-to-Play" Scheme

Dear Friends, Colleagues, Patients & Fellow Citizens:

As medical practitioners and concerned citizens, we're deeply anguished that millions of patients are suffering needlessly, and in many cases dying, because of the unprecedented artificial shortages and surging prices of generic prescription drugs. Most of the approximately 361 drugs* in short supply are sterile injectables administered in hospitals, outpatient facilities, and clinics. They include chemotherapy agents for ovarian, colon, bladder and breast cancer, leukemia and Hodgkin's disease; anesthetics and pain relievers; antibiotics; IV nutrients for malnourished infants, and many other generics that have been saving lives for decades.

Doctors and hospitals are rationing drugs, and patients are being forced to use substitutes that are less effective or more expensive, or both. Lately, this crisis has reached a new level of absurdity: the U. S. is now importing sterile saline solution (a.k.a salt water) from Germany, Norway and Spain and sodium bicarbonate solution from Australia! Drug shortages and astronomical prices are nothing less than a public health emergency.

These chronic artificial shortages are simply unacceptable in our market economy. After extensive research, we have concluded beyond any doubt that they were caused by the anticompetitive contracting practices, kickbacks, self-dealing, and conflicts of interest of giant hospital group purchasing organizations (GPOs). These buying cartels control the purchasing of upward of $300 billion annually in drugs, devices, and supplies for some 5,000 hospitals and thousands more nursing homes and other non-acute care facilities. The same kinds of corrupt practices have driven up the prices of drugs sold by PBMs to individual consumers.

This is a "pay-to-play" scheme in which these cartels award exclusive contracts to favored suppliers in return for exorbitant "administrative," marketing, and other "fees" (a.k.a kickbacks) and rebates. In a nutshell, they've rigged the market. As a result of these dubious practices, there are now only one or two suppliers for many of these drugs, or none at all. In a throwback to the disgraced Soviet economic system, the GPOs have virtually destroyed this once-robust American industry by undermining the time-tested laws of supply and demand that govern virtually every other industry, from autos to zucchini. Indeed, they have stifled competition in the entire hospital supplies marketplace, inflating annual healthcare costs by at least $30 billion, according to a 2011 empirical study.

And no one seems to know where all the GPO and PBM billions are going, because there is virtually no disclosure, regulation, or government oversight of these industries. That is no accident. GPOs and PBMs and their allies write big checks to powerful members of Congress to make sure we're kept in the dark about their questionable activities.

What's more, U. S. drug shortages have had a global domino effect. Sick people in rich and poor countries alike, from Australia to Zambia, are suffering from shortages of many of the same drugs that are scarce in the U. S.

​To replenish our drug supplies and lower prices, market competition must be restored to the broken generic drug, hospital purchasing, and PBM industries. To accomplish that, Congress must repeal the misguided 1987 Medicare anti-kickback "safe harbor" provision, which gave rise to this crisis by exempting GPOs, and later PBMs, from criminal prosecution for taking kickbacks and rebates from suppliers. Incredible as this may seem, you can now read the documentation for yourself on our website.

For a quick slideshow tutorial, "GPOs 101" starring Adam Smith:

​​​To follow the money trail, see diagram below.

​

Congress created this travesty by legalizing kickbacks and rebates in the health system supply chain, and now it's up to Congress to end it.You can help. If you share our outrage, please sign our Change.org petition and DEMAND that President Trump and Congress repeal the anti-kickback safe harbor IMMEDIATELY.​